tv Nightly Business Report PBS April 6, 2015 6:30pm-7:01pm PDT
this is "nightly business reportrt," with tyler mathisen and sue herera. >> state of denial. stocks clinl, ignoring last week's dismal data. why is bad news for the economy so often good news on wall dollar downer why the stronger dollar spells pain for some smaller companies with made in . and strained relationship the growing backlash big business faces from some of its biggest defenders. all of that and more on "nightly business report" today, monday april 6th. good evening, everyone. sue is off tonight. wall street returned from the holiday weekend and seemed to be in a buying mood. investors shrugged off friday's weak jobs report and gave the
dow a triple-digit gain. the hope is the poor showing on the jobs front would be the reason for the federal reserve to delay raising interest rates until later in the year. sentiment also improved when a reading on the services sector came in in line with estimates, and still showed growth. and then new york fed president bill dudley said chill, when the fed does raise rates, he said it won't be that bad. >> the likely task of short-term interest rates after liftoff is as important as the timing of liftoff. i anticipate the path will be relatively shallow. the headwinds in the aftermath of the financial crisis are still in evidence particularly the diminished availability and the tough returns we see for residential mortgage credit. >> add it up up and the dow jones industrial avera rose 117 points closing at 17,880. the nasdaq was higher by 30 and the s&p 500 was up 13.
that's how wall street felt. but there's no way around the fact that the jobs number last friday was not a good one. as hampton pearson tells us wall street and main street often see the economy very differently, and for good reason. >> reporter: in march, the government says the economy produced only about half the jobs expecte and when combined with revisions for january and february job growth for the first order of this year now stands at 197,000 per month compared to 269,000 for all of 2014. now the guessing game about the economy begins. >> it's going to be important to monitor development to determine whether the softness in the march labor market report we saw on friday whether that foreshows a substantial slowing in the labor force than i currently anticipate. the march labor market report is an indicator whether it will be weak. >> reporter: and whether the
slowdown on the west coast ports were the cut for the economic forecast in the first quarter, but maybe they're predicting a rebound in the second quarter. >> i don't think the economy is that fragile. we should not overreact to one missed unemployment report. this is an estimate of the seasonally adjusted change in the magnitude of 140 million people. to miss by over 100,000, that does happen from time to time. >> what's going to happen here is the economy is going to rebound, and i do think there are questions about how much it rebounds. i think the idea that the economy's going to do better in the second quarter is pretty clear on a number of fronts. >> reporter: for now it appears market concerns over a faltering economy are taking a back seat to expectations of the first quarter slowdown further postponing a rate hike from the fed. >> they traded off something called patience in their verbiage for caution. they are going to be treading lightly because they are figuring we're still on thin ice and they'll continue to be on
thin ice. but they would rather hedge against moving too soon and postpone raising rates than do it too soon and have to retrace their steps. >> reporter: in the coming weeks, earnings reports, the value of the dollar and the price of oil could all change both fed and market expectations. for "nightly business report," i'm hampton pearson in washington. >> as if all of that wasn't bad enough the energy sector will be front and center in the one thing that's definitely going to get wall street's attention over the next few weeks. that would be corporate earnings. while energy earnings are probably going to be bad, bob tells us they'll have plenty of company. and that's not a good thing. >> reporter: this week starts earnings season for the first quarter, and we've got a big problem. is an earnings recession going on. earnings growth for the s&p 500 is expected to be down more than 4% compared to the first quarter a year ago.
the third quarter is just barely positive. and it's dropping fast. this is not good news. that's why a disappointing jobs report on top of other disappointing economic stats recently is a cause for concern. companies cannot cut costs to keep earnings growing forever. we need the economy to grow. to support higher revenues that's the top line and higher earnings that's the bottom line. but wall street is not optimistic about this. not only is earnings growth negative but revenue growth is now expected to be negative for the s&p 500 for the next three quarters. yikes! it's well known that energy companies are the main problem. we all know this. but they're not the only ones six of the 10 s&p sectors are expected to report negative earnings growth including technology in the first quarter. that's why weak job growth numbers are so worrisome. even if the fed doesn't raise rates until late in the year it suggests choppy sideways action for stocks in 2015.
that is unless the recent weak data is just a blip. for "nightly business report," i'm bob pasani at the new york stock exchange. >> the oil patch, the reason falling oil prices were leading to layoffs. that manifested itself in last month's jobs report and in a big way. when it comes to labor pain morgan brennan tells us this might just be the beginning. >> reporter: taking a toll on jobs in the oil patch. energy companies have been laying oftens of thousands of workers. those cuts were particularly high in march. according to the labor department the mining category which includes oil and gas shed 11,000 jobs. the third straight month of losses. bringing the total for the first quarter up to 30,000 jobs lost. to put that in perspective. mining added 41,000 in 2014 meaning roughly 3/4 of last
year's gains have already been erased. economists expect those losses to continue. >> i suspect in april, may, june we'll continue to see sizeable losses. 10,000 20,000 jobs lost per month. it will be a bit of a drag on the overall picture. but i think there's still a fair amount of underlying strength in terms of job growth in the u.s. that it won't derail things. >> reporter: as the number of u.s. oil rigs have dramatically dropped, payrolls have followed suit. oil field services companies making some of the biggest cuts. among the state's hardest hit, texas, oklahoma and north dakota which has a february no longer touts the country's lowest unemployment rate. it's beginning to ripple out to other industries as well particularly manufacturing. >> employment growth in manufacturing steadily decelerates over the last few months. we had about 45,000 jobs plus
positive in november. and then last month it was a minus 1,000 jobs. that could be further in negative territory in the next few months. >> reporter: the fracking boon had been a bright spot for manufacturers. fueling demand for oil and gas equipment and metal piping. but now companies are caused like u.s. steel to idle plants and lay off thousands of workers. for "nightly business report," i'm morgan brennan. john mattingly joins us to talk about the latest jobs report upcoming earnings season what it all means for your money. john always good to see you. >> thank you. >>ve a long sort of series there of packages that lays out a lot of the issues that the economy is facing. do you think we're in just a soft patch, or do you think that we are in a phase where we have to ratchet down our expectations for growth for corporate profits and hence for the stock market? >> no i don't think it's the latter. i think it's a soft patch.
i think it's caused by the dollar caused by the oil. those are things that go up and down. i still think the economy is getting better on balance. i think we see that within a couple of quarters. >> let's turn to earnings. a lot of people have dismal outlooks for first quarter earnings even negative numbers in front of earnings growth. in other words e earnings would be down from where they were a year ago. what do you think? >> i think it's a low hurdle rate. we're ve concerned about our news. sometimes we look at earnings right now sometimes we look out three to six months from now. i think what they're doing because the fed is starting to look out, they'll see that this is probably as bad as it gets right now. >> if you take energy out of that earnings picture, it will be a lot nicer to look at won't it? >> it will be a lot nicer. but you can't take it out. it's there. once oil goes down at some point in time we start to get the earnings back in other sectors. so what we give away today, we get back hopefully in spades a
few quarters from now. >> how do i make money in an environment like this john? >> i think you own stocks. it's a very simple thing. you want to own technology. i think the technology moves are moved by the strong dollar. you want to own financials. they lagged a little bit, but actually whenever the fed raises rates, they won't do it in such a manner to tighten it for a while. i think you want to bottom fish some of the big energy companies, i i get a tax refund in the next few weeks, where would you put it? in the tex nolg areas? >> i should have said europe. they keep on getting better. there's a term going on in europe the fundamentals are changing over there. western europe if i don't own it already. >> what i hear you saying here is not to worry folks, we're in a soft patch here. we may not have a blockbuster kind of year but this is not the time for you to reoriest
your portfolio from a normal stands to a very defensive stance. >> i don't see what's going to make it go down. the fed is not stupid. the fed is not going to raise interest rates until the economy gets better. they won't tighten until well after they've raised interest rates for the first time. they know what the problems are. as long as they're there, that's a tailwind for the market going forward. >> you just made an interesting distinction there. it's going to be different -- you made a distinction between raising interest rates and tightening. >> they tighten when they want to restrain the economy. as the economy gets stronger it can handle higher interest rates. our first mortgage was 12%. i thought it was such a great deal. rates go up and down but the economy being stronger allows for higher rates. it's still stimulus. all the fed does at the beginning i think is just chase the natural rate of interest higher as the economy gets better. only when things start to show inflationary ten des idensies do
they tighten. >> i had one of those mortgages, too, john. it didn't feel. thank you very much. john mattingly with wells fargo management. the strong dollar one of the subtexts we've been talking about. currencies over the last six months or so is starting to take its toll on smaller manufacturers. in particular some companies that export their products that are made here in the u.s. kate rogers has more. >> reporter: the dollar's run up over the past six months dominating everyonemuch of the headlines. the dollar put a squeeze on their business. when the dollar moved higher against foreign currencies, big manufacturs have the ability to ship production to offshore facilities where labor is cheaper. or to cut prices and absorb lower margins. for smaller companies, that's
not always an option. since october, the dollar is up more than 15% versus the euro and nearly 10% versus the yen. for manufacturers like garrett blake, the dollar run-up is already affecting his orders. carbon fiber book stands 50% of his business comes from exports with customers in japan, singapore, tie land and greece. >> let's say in japan, because of the strength of the dollar it is making it more difficult for them to be profitable with our product. >> reporter: in an effort to keep their business blake said he's trying to accommodate overseas customers by cutting shipping costs. >> we'll do what we can. we're all in this together. >> reporter: the preliminary data shows that in 2013 95% of all identified u.s. exporters were smaller/medium size businesses. that's about 300,000 exporters,
accounting for nearly half a billion dollars. while that dollar amount may be small in terms of the larger economy, the number of businesses and workers impacted by exports is wide ranging. lisa says she's also concerned about losing customers to cheaper competitors due to the strong dollar. she exports engine cooling products and incubation systems for fish hatcherys from her business near seattl >> we have competitors out of china that have mimicked our product. the stronger the dollar becomes, the more expensive it is for them to buy our product. so if we can't offer them a deeper discount, they're going to take more of their business to offshore competitors. >> reporter: it's not far off with the fears, either. analysts and trade groups have already said u.s. manufacturers face stiffer competition overseas because of the dollar. because the companies we spoke with say they're committed to keeping business here in america, the question is just how much it will cost them. for "nightly business report," i'
up next the possible rift between big business and one of its traditionally strongest constituencies. what does it mean for corporate america, and possibly the big business is starting to feel some backlash from some of its historically staumplgest supporters. social conservatives. and there could be some big ramifica ayman, what's going on? >> hi tyler. the alliance over the past
number of years, in the wake of the big fight in indiana over gay rights gay marriage and religious freedom, we're seeing a bit of a rift between social conservatives and big business. take a look at some of these quotes that we're starting to see in the media, starting with senator ted cruz. you get a sense of the kind of feeling among social conservatives. quoted in the new york times saying, the fortune 500 is running shamelessly to endorse the radical gay marriage agenda over religious liberty. look at tony perkins, at the family research council group. he said you want to roll back religious freedom, good-bye wal mat, hello conservative grocery. apple and walmart helped sink laws meant to defend religious liberty. a clear schism emerging between the social conservatives and big business folks.
social conservatives saying they don't necessarily worry about the value we hold dear in the conservative movement. >> recognized domestic partnerships and providing benefits and so forth. do we think this is a permanent split? >> well that's going to be one of the key questions going into 2016. it is a fraying of the relationship this week. we're definitely seeing that. whether that can be -- those ties can be mended over the course of the next couple months is going to be the big question for 2016. republican candidates for president, we'll have to pick sides in this. >> what does it mean for businesses? one of the quotations you cited there is good-bye to walmart, hello neighborhood. >> right. >> do those kinds of exhortations or threats have teeth? >> that was the quote about walmart. fascinating to see walmart being criticized from the right for so many years, walmart was the target of people on the left who disliked walmart for what they saw as an anti-union stance. now you're seeing folks on the
right who are upset about walmart's weighing into this religious liberty and gay marriage debate down in arkansas. that debate has flopped entirely. that's going to mean very trick yich navigation for ceos of these big companies. we saw in indiana a lot of the big ceos of indiana companies coming up strongly on the side of gay marriage and marriage freedom in that state. so that's something that those ceos have decided is right for their businesses in that state. >> it will be fascinating to watch, and a fascinating presidential campaign. ayman, thank you. dupont on the offensive against activists, and that's where we start the market focus. the company says the activist investment firm proposal to break it up would cost $4 billion and diminish the chemical company's research capability. it comes as dupont is trying to resist tryon's efforts to replace four of its direct shares rose a fraction to $72.
hudson city bank corporate planned merger is delayed, which weighed down shares of both companies today. the combination has been delayed before. the federal reserve said it still doesn't have a decision. shares of hudson city off almost 7% to $9.77. that made it the worst performing stock in the s&p 500 today. m & t fell to $123.76. shares of mattel had a rough ride lately on analyst upgrade. toy maker ready to buy b. reilly and a new ceo to restore the company. duke energy is going to buy back $1.5 billion worth of its stock under an accelerated stock repurchase program. if you have duke in your stock market bracket, you're happy today. up about 1.7%. >> true car impressed investors with news that it added 840 new
dealers to its car buying that's a website in the first quarter, that is the best quarterly total ever bringing all of its dealers now the total to an all-time high of more than 10,000. shares up 2% to $16.08. and viacom announcing it will take a $785 million charge in its latest quarter. it's also going to lay off employees, do some restructuring. the charge of write downs of underperforming tv shows. the media company will also suspend the buyback program for now at least. shares initially then reversed course before the close. the stock was 1.5% higher at $68.60 but you can see what happened after 4:00 p.m. 3-d systems is buying easy way, that's a chinese based 3-d printing sales and services provider. in terms of the deal not disclosed. shares were up more than 4% to $28.67. and the health care real estate investment trust ventas will buy
a hospital operator for nearly $2 billion. the company also says it will spin off its nursing facilities into a separate reit. shares up 5% to $76.90. the high-profile prosecutor trying to clean up wall street suffered a potential setback late last week. and it has the potential to under do other insider trading aces he thought he'd won. >> reporter: a big loss for new york's powerful united states attorney whose string of more than 80 inside trader convictions in eight years is now in jep ard. the appeals court refused to hear a case that had recently overturned. in december the second circuit ruled prosecutors trying the newman case had relied on an interpretation of the insider trading codes that was simply too broad. this meant that not only was
ferrara's winning streak in question but also comparable cases around new york including for men accused of insider trading in ibm, and another tipping off his roommate to the nutrition company her herballife. sheldon silver was recently indicted. and one said if he was a kardashian he would be kanye west. he asked for a second shot at appealing the newman case. a shot that was rejected. now i'm told he's pursuing a supreme court review. it will require approval at the justice department and it may take some powerful internal lobbying to make that happen. for "nightly business report," i' kel in new york. coming up why the latest hollywood blockbuster could be on track to break $1 billion at the box office and why it bodes
well for hollywood thi more employment data jobs opening and labor turnover survey called jolt also on the data front we'll have the latest consumer credit report and hear from another fed president tomorrow. that is what to watch on tuesday. fast and furious 7 racing ahead of the pack this weekend. bringing in nearly $400 million worldwide. nearly $144 million right here in the u.s. this could be a big deal for hollywood. certainly a big deal for the movie's producer universal, which is part of nbc universal
which produces thi >> reporter: fast and furious 7 is not only the biggest opening weekend in a year and a half it's the biggest debut ever for a film not based on a comic book or young adult novel >> it's already closing in on $400 million after its first weekend. and could be the first in the entire franchise to hit $1 billion worldwide. these are staggering numbers. >> reporter: it's a huge win for universal pictures. they're working on yet another sequel hoping to have it ready for theaters by 2017. said to open at universal studio hoilds in june. hollywood's taking note that fast 7's diverse cast brought a big and diverse audience. it was 37% hispanic and 24% african here in the u.s. audiences are willing to pay up for an event film from an established brand, which bodes
well for a summer full of familiar franchises. the summer box office is jam packed with big names, like marvel the avengers and mission impossible. >> last year we saw the box office decline. there was a lot of questions raised. i think we've seen the pace this year rebound. >> reporter: at this rate this could be the first year the north american box office hit $11 billion, and the worldwide box office hit $40 billion. for "nightly business report," i'm julia borsten in los angeles. finally, there was a game last night, but today's really opening day in major league baseball. and on cue, disney is investing $250 million in the fantasy sports website draft king. the site lets fans play fantasy sports using real money. the fantasy sector is starting to gain a lot of attention. the venture arm of comcast, the
parent of cnbc which owns this program, has a stake in the biggest space. the disney deal values draft kings at just under $1 billion. and that gives a whole new meaning to the phrase pl and that's it for "nightly business report" for tonight. i'm tyler mathisen. sue herera is away for a few days. thanks everybody, for watching. we'll see you right ba.
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